Sir Richard Branson's Virgin Money is poised to become a real force in UK
retail banking. Here we look at what the billlionaire businessman will get
from buying Northern Rock from the taxpayer.

How much is Virgin Group's cash contribution to the deal and what stake will they have in the combined business?

Virgin Group’s exact contribution has not been disclosed, but as the majority owner of Virgin Money, it has an 80pc holding, it is the main cash contribution for the deal has come from US investor WL Ross, which owns a 20pc stake in Virgin Money.

WL Ross and Virgin Group will each own a 45pc stake in the combined business. Stanhope Capital, a vehicle of an Abu Dhabi wealth fund, will also own a minority stake.

What is the projected income for Virgin Group from licensing rights?

Virgin Group is paid a licensing fee for using its name of about 1pc of revenues from most of its ventures and the same arrangement is expected to continue with Virgin Money once it completes the Northern Rock Plc deal. Sources close to the company, suggest that total earnings from licensing over the next five years are not expected to be more than £10m. “It will not be a material amount,” said one source.

Will Sir Richard Branson sit on the board of the combined business?

Sir Richard will not take a seat on the board, however Virgin Group will take two out of seven seats on the combined business’s board. Gordon McCallum, a long-time business partner of Sir Richard and a member of the Virgin Group board, will sit as an non-executive, as will another Virgin Group representative.

Jayne-Anne Gadhia, Virgin Money’s chief executive, will sit as an executive board member, along with two colleagues.

Sir David Clementi, a former Deputy Governor of the Bank of England, will chair the bank’s board. The other three board members are Colin Keogh, the former chief executive of Close Brothers, Norman McLuskie, a former deputy chief executive of Royal Bank of Scotland, and James Lockhart, vice chairman of WL Ross.

There will be no state representative on the board, or any former Northern Rock board member.

Will the combined business continue to receive any form of continuing state support?

There will be no continuing taxpayer support for the bank, however the state will retain an interest in the business through a holding of £150m of Tier 1 capital notes. These will convert into a stake in Virgin Money should it float within the next five years. The current expectation is that a float could lead to an additional gain for the taxpayer of between £50m and £80m.

When is the combined business expected to return to profit?

Sources close to Virgin Money have guided expectations away from a profit in 2012 and say the combined business will at best break-even. The expectation is the company will return to profit in 2013.